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ISS Recommends AOL Holders Vote for Two Starboard Nominees

AOL’s annual meeting is set for June 14. Photographer: Scott Eells/Bloomberg
AOL’s annual meeting is set for June 14. Photographer: Scott Eells/Bloomberg

June 2 (Bloomberg) -- Institutional Shareholder Services Inc. recommended that AOL Inc. shareholders vote for six directors selected by the Internet company, as well as two nominated by investor Starboard Value LP.

ISS recommended voting for Starboard nominees Jeffrey Smith and Dennis Miller, according to a copy of the report provided to Bloomberg News. “These two nominees appear particularly well-equipped to drive the boardroom change the dissident has demonstrated is necessary,” ISS wrote in the report.

In April, Starboard Value said the sale of AOL patents to Microsoft Corp. doesn’t go far enough in solving the company’s problems, urging it to find new ways to extract value from its advertising business. The investor also asked AOL to return more cash to shareholders and said it planned to nominate three candidates to AOL’s board.

Smith declined to comment. A telephone call placed and e-mail sent to ISS outside of regular business hours went unanswered.

Maureen Sullivan, an AOL spokeswoman, said, “We kind of expected this. ISS tends to vote with dissidents.”

AOL, in a statement sent earlier today, said that Starboard nominees Smith and Miller lack an understanding of the company’s business model, and don’t have a “viable plan for AOL other than to break up and liquidate the company.”

Media, Technology

Smith, 40, is co-founder and chief executive officer of Starboard Value since February 2011, according to Starboard’s May 29 proxy filing with the U.S. Securities and Exchange Commission. Miller, 55, is an adviser to Lions Gate Entertainment Corp., and focuses on investing in media and technology, according to Starboard’s filing.

A third Starboard nominee is James Warner, 58, the principal of advisory firm Third Floor Enterprises, a company specializing in digital marketing and media.

AOL said Egan-Jones Proxy Services on May 29 supported the election of all of its nominees, and urged shareholders to follow the Egan-Jones recommendation and not that of ISS. Starboard Value owned about 5.3 percent of AOL’s shares outstanding as of May 25.

AOL’s annual meeting is set for June 14.

Shares of New York-based AOL fell 32 cents to $27.11 in New York Stock Exchange composite trading yesterday. The stock has gained 80 percent this year.

To contact the reporter on this story: Dan Hart in Washington at

To contact the editor responsible for this story: Sylvia Wier at

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